"…two prostitutes came to the king (Solomon) and stood before him. One of them said, ‘My lord, this woman and I live in the same house. I had a baby while she was there with me. The third day after my child was born, this woman also had a baby. We were alone; there was no one in the house but the two of us. During the night this woman's son died because she lay on him. So she got up in the middle of the night and took my son from my side while I your servant was asleep. She put him by her breast and put her dead son by my breast. The next morning, I got up to nurse my son— and he was dead! But when I looked at him closely in the morning light, I knew that it wasn't the son I had borne.' The other woman said, ‘No! The living one is my son; the dead one is yours.' The king said, ‘Bring me a sword.' So they brought a sword for the king. He then gave an order: ‘Cut the living child in two and give half to one and half to the other.' The woman whose son was alive was filled with compassion for her son and said to the king, ‘Please, my lord, give her the living baby. Do not kill him; she is his mother.' But the other said, ‘Neither I nor you shall have him. Cut him in two!' Then the king gave his ruling: ‘Give the living baby to the first woman. Do not kill him; she is his mother.'" 1 Kings 3:16-27 (NIV). Which of the following concepts is best illustrated by King Solomon's actions in this passage? Signaling, screening, moral hazard, or adverse selection. Explain.
"…two prostitutes came to the king (Solomon) and stood before him. One of them said, ‘My lord, this woman and I live in the same house. I had a baby while she was there with me. The third day after my child was born, this woman also had a baby. We were alone; there was no one in the house but the two of us.
During the night this woman's son died because she lay on him. So she got up in the middle of the night and took my son from my side while I your servant was asleep. She put him by her breast and put her dead son by my breast. The next morning, I got up to nurse my son— and he was dead! But when I looked at him closely in the morning light, I knew that it wasn't the son I had borne.'
The other woman said, ‘No! The living one is my son; the dead one is yours.'
The king said, ‘Bring me a sword.' So they brought a sword for the king. He then gave an order: ‘Cut the living child in two and give half to one and half to the other.'
The woman whose son was alive was filled with compassion for her son and said to the king, ‘Please, my lord, give her the living baby. Do not kill him; she is his mother.'
But the other said, ‘Neither I nor you shall have him. Cut him in two!'
Then the king gave his ruling: ‘Give the living baby to the first woman. Do not kill him; she is his mother.'" 1 Kings 3:16-27 (NIV).
Which of the following concepts is best illustrated by King Solomon's actions in this passage? Signaling, screening, moral hazard, or adverse selection. Explain.
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